Because damage remains marked on a creature until the damage is removed as the turn ends, nonlethal damage dealt to one Seven Dwarves may become lethal if another Seven Dwarves you control leaves the battlefield during that turn.

The last ability of Seven Dwarves lets you ignore the "four-of" rule. It doesn't let you ignore format legality. For example, during a Throne of Eldraine Limited event, you can't add Seven Dwarves from your personal collection, no matter how happy they would be.

If you're fortunate enough to open or draft eight or more Seven Dwarves during a Limited event, you can include only seven of them in your deck. The rest remain in your sideboard.